Про Податковий Кодекс від Драгон Кепітал

1. MACRO RESEARCH
Ukraine
TAX CODE December 6, 2010
Neutral for Economy, Long-Term Positive for Stock Market
Ukraine’s newly approved Tax Code is set to enter into effect on Jan. 1, 2011 after Key Tax Rate Dynamics
parliament passed a revised version of the document last Thursday and President 30% Corporate Tax VAT
Viktor Yanukovych promptly signed it into law on the following day. Its most
25%
immediate implication is that the government can legitimately proceed with
20%
drafting the 2011 budget based on new taxation rules. Submitting a realistic budget
with a deficit trimmed to 3.5% of GDP is one of the IMF’s key requirements for 15%
disbursing its next $1.5bn loan tranche from a $15bn Stand-by package for Ukraine 10%
by the end of December. 5%
The new tax law cuts the corporate tax rate by 2pp annually through 2014, from the 0%
current 25% to 16%, and grants a 10-year exemption to aircraft makers, 2010 2011F 2012F 2013F 2014F
shipbuilders and hotels among others. VAT is to be lowered to 17% from 20% in
2014. This is obviously no turnaround for the current cumbersome tax system but
still will ease the overall tax burden, benefiting large- and medium-sized Fiscal Balance* (% of GDP)
companies in the first place. 0%
The document leaves intact a special tax regime for agro producers but changes (2%)
VAT regulations on grain sales intended to solve the VAT refund problem and (4%)
make grain exports more transparent. It also hikes royalties for oil and gas (6%) IMF target
producers as well as confirms earlier approved increases in excise rates on oil (8%)
(10%)
Actual
products, alcohol and tobacco. No less importantly, the Code keeps the existing
simplified taxation regime (STR) for individual entrepreneurs and limits the 2004 2005 2006 2007 2008 2009 2010E 2011F
powers tax authorities can exercise vis-à-vis business, thus rectifying the most Note: *data for 2009 onwards includes Naftogaz
problematic issues that triggered mass street protests by small businessmen and Ukrainy
forced Yanukovych to veto the original legislation and ask parliament to approve Stock Market
his amended version on Dec. 2.
PFTS Volume ($m; lhs) UX Volume ($m; lhs)
We think the overall impact of the Tax Code on the economy will be neutral to KP-Dragon Index (rhs)
positive, with gains for large businesses, which account for an estimated 70-80% of 25 5,200
Ukrainian GDP, to be partly offset by negatives for small businessmen. The impact 20 5,000
on budget revenues is likely to be insignificant. We estimate revenue losses due to 15 4,800
the lower corporate tax rate at about 0.3% of GDP in 2011, which is likely to be fully 4,600
10
offset by higher excise rates and royalties as well as measures aimed at combating 4,400
tax evasion. 5 4,200
We estimate the planned rate cuts, lower tax expenses and resulting increase in 0 4,000
profitability will yield a long-term positive valuation effect of 10% for listed 15-Jun 14-Jul 11-Aug 9-Sep 7-Oct 4-Nov 2-Dec
companies. Among those, we single out Ukrnafta, Motor Sich and Zaliv Shipyard,
which should benefit from the corporate tax exemption and other industry-specific
privileges. For other companies, the planned corporate and VAT rate cuts should
produce a positive effect by enabling them to earmark additional funds for
expansion and modernization.
Key Macroeconomic Indicators
Year 2004 2005 2006 2007 2008 2009 2010E 2011F
Real GDP growth (y-o-y; %) 12.1% 2.7% 7.3% 7.9% 2.1% (15.1%) 5.0% 4.5%
Nominal GDP ($bn) 64.9 86.1 107.8 142.7 180.0 117.3 139.5 169.9
Real industrial growth (y-o-y; %) 12.5% 3.1% 6.2% 10.2% (3.1%) (21.9%) 10.0% 6.5%
Consumer price index (e-o-p; %) 12.3% 10.3% 11.6% 16.6% 22.3% 12.3% 9.5% 10.5%
General gov’t & Naftogaz balances* (% of GDP) (4.4%) (2.3%) (1.4%) (2.0%) (3.2%) (6.3%) (5.4%) (5.0%)
Total public debt (% of GDP) 24.7% 17.7% 14.8% 12.3% 19.9% 34.7% 38.9% 39.4%
C/A balance (% of GDP) 10.6% 2.9% (1.4%) (3.7%) (7.1%) (1.5%) (2.0%) (2.5%)
Net FDI ($bn) 1.7 7.5 5.7 9.2 9.9 4.5 5.5 8.0
NBU gross international reserves ($bn) 9.5 19.4 22.3 32.5 31.5 26.5 36.0 43.0
UAH:USD (market rate; e-o-p) 5.31 5.05 5.05 5.05 7.85 8.00 7.85 7.50
UAH:USD (market rate; avg.) 5.32 5.12 5.05 5.05 5.31 8.14 7.92 7.68
Note: *includes the central and local budgets, Pension Fund and, from 2009 onwards, Naftogaz Ukrainy, but excludes bank recapitalization costs.
Sources: Government statistics, National Bank of Ukraine, Dragon Capital estimates and forecasts
Analysts: Olena Bilan, Sergiy Gayda, Taisia Shepetko, Email: research@dragon-capital.com
Tamara Levchenko, Dennis Sakva (+380 44) 490 7120 www.dragon-capital.ua

2. December 6, 2010
TAX CODE OVERVIEW
The Verkhovna Rada last Thursday approved the final version of the Tax Code Parliament approved a revised
incorporating amendments submitted by President Viktor Yanukovych after he Tax Code with presidential
vetoed the original document. It took Yanukovych only one day to sign the new bill amendments…
into law with the official enactment date of Jan. 1, 2011. The Code keeps intact the
existing simplified taxation regime (STR) for individual entrepreneurs but it is to be
revised later on. The document, unlike its previous version, also limits the powers tax
authorities can exercise vis-à-vis business, thus rectifying the most problematic issues
that triggered mass street protests by small businessmen in the past two weeks.
The most important changes introduced by the Code include: …that overhauls tax legislation
• The corporate income tax rate will be reduced gradually from the current
25% to 16% in 2014, with light industry companies, hotels, aircraft
producers, shipbuilders and producers of agricultural machinery to enjoy a
10-year exemption.
• The VAT rate will be cut by 3pp to 17% in 2014. The Code specifies
eligibility criteria for automatic VAT refunding and imposes fines on the
government for delaying such refunds.
• The document leaves intact a special tax regime for agricultural producers
and hikes royalties for oil and gas as well as confirms earlier approved hikes
in excise rates on oil products, alcohol and tobacco.
• A number of minor taxes were scrapped.
We summarize these and other major changes below.
Tax Current status Adopted changes
Corporate profit tax 25% 23% from 2011
21% from 2012
19% from 2013
16% from 2014
10-year tax holidays for the light industry, hotels, aircraft makers, shipbuilders and producers of
agricultural machinery; 5-year tax holidays for small businesses and startups
VAT 20% 17% from 2014; automatic VAT refunding for eligible companies; the government faces fines in
case of delaying refunds; ; zero rate for agro producers and exporters (excluding trading companies)
Personal income tax 15% 15% for monthly incomes below 10x minimum wage (UAH 9,220 as of Dec. 1);
17% for monthly incomes above 10x minimum wage
Excise taxes on oil products No changes in Tax Code but parliament earlier approved 38-40% hikes effective 2011
Excise taxes on alcohol and tobacco No changes in Tax Code but parliament earlier approved a 7% increase effective 2011 (not applied
to beer producers)
Oil royalties 40% hike from 2011
Gas royalties 18.5% hike from 2011
Simplified Taxation Regime (STR) for small businesses No changes in rates and thresholds; costs of goods and services purchased from entrepreneurs using STR
(except IT services) by companies subject to general taxation regime are no longer tax deductible
Fixed agricultural tax, special VAT regime for agro producers* No changes
Tax on interest earned on bank deposits 5% from 2015
Property tax Progressive rate ranging from 0% to 2.7% of the minimum wage per square meter applied
depending on taxable property area from 2012
Tax Code: Key Changes to Existing Taxation Regime
Note: *agro producers retain VAT in their bank account to use for CAPEX and production needs. Source: Verkhovna Rada
Tax Code: Neutral for Economy; Long-Term Positive for Stock Market 2

3. December 6, 2010
IMPACT ON ECONOMY: NEUTRAL
Ukraine’s current corporate and VAT rates (25% and 20% respectively) are moderate The Code cuts tax rates and
by regional standards. With the rate cuts envisaged by the Code, the country will streamlines tax legislation…
boast one of the lowest tax rates in Europe by 2014. This is obviously no turnaround
for the current cumbersome tax system but still will ease the overall tax burden,
benefiting large- and medium-sized companies in the first place. Moreover, the
enactment of the Code as a systematic collection of taxation rules as well as planned
abolition of a number of small taxes will also streamline the existing legislation.
40% 30%
30% 25%
20%
20% 15%
10% 10%
5%
0% 0%
Czech Rep.
Malta
Bulgaria
Romania
Ukraine
Austria
Ukraine
Hungary
Russia
Estonia
Italy
Greece
UK
Germany
France
Norway
Malta
Czech Rep.
Denmark
Switzerland
Portugal
Finland
Ukraine
Romania
Austria
Bulgaria
Estonia
Ukraine
Ireland
Cyprus
Luxembourg
Netherlands
Spain
UK
Russia
Germany
Greece
France
Italy
Hungary
Sweden
Belgium
Switzerland
Portugal
Norway
Denmark
Finland
Luxembourg
Ireland
Cyprus
Spain
Netherlands
Belgium
Sweden
Corporate Income Tax Rates in Europe (%) VAT Rates in Europe (%)
Sources: AGN International, Dragon Capital estimates
In contrast to CEE peers, the Ukrainian economy is dominated by large businesses …benefiting large companies,
which account for an estimated 70-80% of GDP. This implies the corporate tax which dominate the economy…
reduction should produce a positive effect on the economy in the longer term by
enabling companies to release additional funds for expansion and modernization.
80% 80% 0%
70% 70% (2%)
60% 60% (4%)
50% 50% (6%)
40% 40% (8%)
30% 30% 2009 2010E 2011F
20% 20% (10%)
10% 10% (12%)
0% 0% (14%)
Czech Rep.
Slovak Rep.
Ukraine**
UK
Greece
France
Italy
Germany
Russia
Portugal
Spain
Latvia
Lithuania
Croatia
Slovenia
Estonia
Romania
Poland
Turkey
Bulgaria
Hungary
Lithuania
Slovenia
Poland
Croatia
Estonia
Czech Rep
Slovak Rep
Romania
Latvia
Ukraine*
Bulgaria
Turkey
Hungary
Share of Small and Medium-Sized Enterprises in GDP (2008; %) Fiscal Deficit: Ukraine vs. European Countries (% of GDP)
Note: *unofficial estimate for Ukraine; **IMF-set ceilings for 2010 and 2011. Sources: Finance Ministry, Pension Fund, State Treasury, European Commission,
Eurostat, IMF, Dragon Capital estimates
Yet, the above gains may partly be offset by negative impact on private …but adversely affecting private
entrepreneurs. Despite preserving the STR, the Code includes a provision that makes entrepreneurs
the costs of goods and services purchased from STR businesses (except IT services)
non-deductible for companies subject to the general taxation regime. While this will
limit the scope for tax evasion, which the earlier arrangement allowed, it will also
hampers B2B activity between large companies and private entrepreneurs.
That said, we think the overall impact of the Tax Code on the economy will be The overall impact is neutral to
neutral to positive, with gains for large businesses to be counterbalanced by positive, no significant effect on
negatives for small businessmen. The impact on budget revenues is likely to be budget revenues
insignificant. We estimate revenue losses due to the lower corporate tax rate at about
0.3% of GDP in 2011, which is likely to be fully offset by higher excise rates and
royalties as well as measures aimed at limiting tax evasion.
Tax Code: Neutral for Economy; Long-Term Positive for Stock Market 3

4. December 6, 2010
Approval of the Code paves the way for the government to proceed with drafting the Approval of the Tax Code
2011 budget based on new taxation rules. Submitting a realistic budget with a deficit brightens the prospects to
trimmed to 3.5% of GDP — which is expected to be achieved primarily via spending receive the next IMF tranche…
cuts — is one of the IMF’s key requirements for disbursing its next $1.5bn loan
tranche by the end of December. The Fund also wants the authorities to reinstate
penalties for overdue utilities payments and initiate pension reforms including many
unpopular measures such as a gradual increase in the retirement age for women.
On a related note, the revised Tax Code was endorsed by a solid majority of 268 …with voting results boding
lawmakers, including 20 deputies from the opposition Our Ukraine and Yulia well for the endorsement of
Tymoshenko Bloc factions. It is important that the bill would have secured the IMF-required pension
required majority of at least 226 votes even without the 26-strong Communist faction. legislation
The ruling party’s effective independence from Communists, gained recently thanks
to defectors from the opposition, bodes well for the IMF-required approval of
unpopular pension legislation later this month as the old-guard leftists are almost
certain to reject it.
IMPACT ON STOCK MARKET: POSITIVE LONG-TERM GAINS
In terms of impact on individual companies, particularly large and medium-sized Long-term positive valuation
businesses, the planned rate cuts, lower tax expenses and resulting increase in for stocks estimated at 10% on
profitability should yield a long-term positive valuation effect of 10%, with exporters average
standing to gain a marginally lower 9% as they won’t be influenced materially by the
VAT reduction. We analyze the impact on selected listed companies in more detail in
the next chapter.
The Tax Code also introduces several changes regarding stock market operations, Dividend tax for individuals
particularly taxation of dividends. Starting next year, the dividend tax for private cut to 5%
individuals will be cut to 5% from 15%, with the rate paid by non-residents left
unchanged at 15% and domestic corporates to continue paying the standard income
tax rate. Moreover, in case dividends are paid to individuals and parent companies,
the company distributing them will be exempt from income tax on such payouts
(advance income tax is to be charged when dividends are paid and subtracted from
the income tax balance in future periods). Although the beneficiaries of most local
companies are offshore-registered corporate entities, the reduced dividend tax for
individuals may serve as a long-term incentive for shareholders to increase dividend
payouts, as only a handful of private companies in Ukraine presently pay dividends.
The government left income earned by non-residents on government securities tax- Income on government
exempt. This provision covers both pure sovereign and municipal bonds as well debt securities remains tax-
with government guarantees. The same applies to Ukrainian residents purchasing exempt…
government-issued/guaranteed securities on the primary or secondary markets.
The Code also requires including interest accrued on purchased securities in total Delays in interest payments…
taxable income for the period when such interest payment was or was expected to be
made according to conditions of the appropriate security issue. This may have
negative implications in case of non-timely payment of interest, leading to increased
taxable income and tax expenses for the investor.
Tax Code: Neutral for Economy; Long-Term Positive for Stock Market 4

5. December 6, 2010
According to the Tax Code, the so called “30-day rule”, when in the event of 30 …and the “30-day rule” may
calendar days prior to the sale of securities or derivatives, and for the next 30 calendar overstate taxable income
days after such sale, the taxpayer purchases a package of identical securities or
derivatives, then investment loss that may result from such sale shall be disregarded
in determining the overall financial result of operations with investment assets. The
value of purchased securities for tax purposes is determined by its purchase price, but
not lower than the price of the sold package. This may have negative implications in
case of inability to offset incurred losses with income on identical frequently traded
securities, implying additional taxable income and tax expenses. Exceptions include
block trades with over 25% stakes, share buyback, and purchase of securities during a
private placement. Both the abovementioned delays in interest payments and the “30-
day rule” may have negative implications for local market activity but we see
agreement between local stock exchanges and market players in order to revise these
regulations.
IMPACT ON SELECTED LISTED COMPANIES: NEUTRAL FOR UNAF, POSITIVE FOR MSICH, SZLV
Starting from Jan. 1, 2011, VAT will not be levied on agricultural producers selling New VAT rules for agro
grain, meaning they will neither pay the tax to state budget (as was the case before) producers, distribution
nor keep it in their bank accounts to reinvest in operations. However, they will still companies and traders…
pay VAT on purchased materials and services used in production (COGS). Thus, the
abolition of VAT on grain sales is unlikely to bring crop prices down. Grain traders
buying crops directly from producers and exporting them will therefore not deal with
VAT at all. Intermediaries, however, will have to pay VAT on grain purchased from
producers and sold to exporters.
Such mechanism should stimulate traders and exporters to buy grain directly from …to facilitate grain exports
producers rather than deal with VAT refund credits from the state. This should help
to make the market more transparent and facilitate grain export procedures, thereby
carrying positive implications for listed grain producers such as Astarta Holding
[Buy; FV $37.53], MHP [Hold; FV $23.60], Kernel Holding [Under Review], Ukrros
[Buy; FV $0.87], Mriya Agro Holding [Under Review], Agroton [Not Rated], Sintal
Agriculture [Not Rated], MCB Agricole [Not Rated], Landkom [Not Rated] and
Dakor Agro Holding [Not Rated].
The Tax Code increases the base royalty rate for oil from $26/bbl to $36/bbl for Oil royalties to increase 40%,
reservoirs above 5,000 m and from $9.7/bbl to $13.6/bbl for those below 5,000 m. A gas royalties 18.5%
correction coefficient, calculated by dividing the imported oil price by $71/bbl, will be
applied to the base rate. The base rate for natural gas was increased from $25/tcm to
$30/tcm for above-5,000 m deposits and from $12.6/tcm to $14.9/tcm for deeper than
5,000 m extraction. The correction coefficient will be calculated by dividing the
average price of imported gas by $179.5/tcm. For companies supplying gas to
households, the royalties will grow to $7.4/tcm (above 5,000 m) and $5.9/tcm (below
5,000 m). The higher royalties will obviously have a negative impact on oil and gas
producers by denting their net sales.
At the same time, the law closes the legal loophole that has so far enabled Ukrnafta Ukrnafta: no more loopholes
[Hold; FV $54.5] to sell oil at below market prices. The company presently sells oil to sell oil at 20% discount
with an approx. 20% discount to the price of imported crude, and eliminating it will
provide for an additional $216m of revenues annually (assuming a $75/bbl average
for 2011), thus more than offsetting the planned increase in royalties.
Tax Code: Neutral for Economy; Long-Term Positive for Stock Market 5

6. December 6, 2010
In addition, the Code provides for a hike in excise taxes on gasoline (+38% to EUR Higher gasoline tax will likely
182/t) and diesel fuel (+38-40% to EUR 42-90/t). It also introduces an LNG excise tax be passed on to final
of EUR 40/t. The proposed tax increases imply additional cash outflows on gasoline consumers
purchases as well as growth in working capital for companies such as Galnaftogaz
[Buy; FV $0.025]. However, we expect fuel traders and retailers to fully pass higher
costs on to end consumers, implying a UAH 0.5/liter increase in the gasoline retail
price, as domestic demand for fuel has been quite inelastic.
The legislation grants 10-year tax holidays for the light industry, hotels, aircraft Income tax holidays to benefit
makers and shipbuilders. This bodes well for Motor Sich [Buy; FV $449], the leading Motor Sich, Zaliv Shipyard
CIS producer of aircraft engines, and Zaliv Shipyard [Buy; FV $0.042], Ukraine’s and Clubhouse Group
leading producer of large-capacity ships. We estimate potential income tax savings
for those companies at $500m and $40m, respectively, over 2011-20. We plan to
update our model on those companies accordingly and put our recommendation on
Motor Sich under review for upgrade. This provision is also beneficial for hotel
operator Clubhouse Group [Not Rated].
In more good news for shipbuilders, the Tax Code reinstates an earlier regulation VAT privileges bode well for
(suspended in 2008) that allowed shipbuilders to pay VAT on imported goods with Zaliv Shipyard
720-day promissory notes. Since 2008 shipyards, whose production cycle is highly
capital-intensive, have been required to pay VAT on imports with cash only, which
depleted their cash flows and working capital, and the situation was exacerbated by
the government delaying VAT refunds.
The Code also confirms the earlier approved tax preferences for aircraft producers Additional tax preferences for
which exempted eligible companies, including Motor Sich, from the land tax as well Motor Sich confirmed
as VAT on imported goods purchased for production purposes. According to Motor
Sich CEO Vyacheslav Bohuslayev, those tax breaks imply a 7% cost saving for the
company, or $300m in total over 2010-16.
Tax Code: Neutral for Economy; Long-Term Positive for Stock Market 6

7. December 6, 2010
MACROECONOMIC INDICATORS
Year 2004 2005 2006 2007 2008 2009 2010E 2011F
Real Sector
Real GDP (% y-o-y) 12.1% 2.7% 7.3% 7.9% 2.1% (15.1%) 5.0% 4.5%
Household Consumption (% y-o-y) 13.1% 20.6% 15.9% 17.1% 11.6% (14.1%) 2.5% 5.0%
Gross Fixed Capital Formation (% y-o-y) 20.5% 3.9% 21.2% 20.0% 1.9% (48.1%) 8.0% 12.0%
Nominal GDP (UAH bn) 345 441 544 721 950 915 1,105 1,304
Nominal GDP ($bn) 65 86 108 143 180 117 139 170
GDP per Capita (at F/X rate; $) 1,372 1,836 2,310 3,077 3,897 2,552 3,043 3,721
Real Industrial Output (% y-o-y) 12.5% 3.1% 6.2% 10.2% (3.1%) (21.9%) 10.0% 6.5%
Real Agricultural Output (% y-o-y) 19.9% 0.0% 2.5% (6.5%) 17.1% 0.1% (1.5%) 0.5%
Prices
Consumer Price Index (e-o-p; % y-o-y) 12.3% 10.3% 11.6% 16.6% 22.3% 12.3% 9.5% 10.5%
Consumer Price Index (avg.; % y-o-y) 9.0% 13.5% 9.1% 12.8% 25.2% 15.9% 9.2% 8.9%
Producer Price Index (e-o-p; % y-o-y) 24.1% 9.6% 15.6% 23.3% 23.0% 14.3% 18.0% 9.0%
Producer Price Index (avg.; % y-o-y) 20.5% 16.7% 9.6% 19.5% 35.5% 6.5% 19.0% 13.6%
GDP Deflator (% y-o-y) 15.1% 24.5% 14.8% 22.7% 29.1% 13.0% 15.0% 13.0%
External Sector
Current Account Balance ($bn) 6.9 2.5 (1.6) (5.3) (12.8) (1.8) (2.8) (4.3)
Current Account Balance (% of GDP) 10.6% 2.9% (1.4%) (3.7%) (7.1%) (1.5%) (2.0%) (2.5%)
Merchandise Trade Balance ($bn) 3.7 (1.1) (5.2) (10.6) (16.1) (4.7) (8.4) (10.6)
Goods Exports (FOB; $bn) 33.4 35.0 38.9 49.8 67.7 40.4 51.4 59.8
Exports Growth (y-o-y; %) 42.6% 4.8% 11.2% 28.0% 35.9% (40.3%) 27.2% 16.3%
Goods Imports (FOB; $bn) 29.7 36.2 44.1 60.4 83.8 45.0 59.8 70.4
Imports Growth (y-o-y; %) 23.7% 21.8% 22.1% 36.9% 38.7% (46.2%) 32.7% 17.7%
Services Trade Balance ($bn) 1.2 1.8 2.1 2.4 1.7 2.6 4.5 5.0
Net Income Balance ($bn) (0.6) (1.0) (1.7) (0.7) (1.5) (2.4) (2.0) (2.0)
Net Current Transfers ($bn) 2.6 2.8 3.2 3.5 3.1 2.7 3.0 3.3
Capital and Financial Accounts Balance ($bn) (4.2) 8.0 3.7 15.8 9.7 (11.9) 8.0 6.0
Net FDI Inflow ($bn) 1.7 7.5 5.7 9.2 9.9 4.5 5.5 8.0
Gross External Debt ($bn) 30.6 38.8 54.5 80.0 101.7 103.3 109.9 114.3
Gross External Debt (% of GDP) 47.1% 44.4% 50.6% 56.0% 56.5% 88.1% 78.8% 67.3%
Public Finances
Central Budget Revenues (% of GDP) 1), 3) 20.4% 23.8% 24.5% 23.0% 24.4% 22.9% 22.6% 23.0%
Central Budget Expenditures (% of GDP) 1), 3) 23.3% 25.6% 25.2% 24.4% 25.7% 26.8% 27.2% 27.4%
Central Budget Balance (% of GDP) 1), 3) (3.0%) (1.8%) (0.7%) (1.4%) (1.3%) (3.8%) (4.5%) (4.4%)
General Government Balance (% of GDP) 2), 3) (4.4%) (2.3%) (1.4%) (2.0%) (3.2%) (6.3%) (5.4%) (5.0%)
Naftogaz Balance (% of GDP) 2), 3) na na na na na (2.5%) (1.0%) 0.0%
Total Public Debt ($bn) 3) 16.1 15.5 15.9 17.6 24.6 39.8 54.7 68.6
Total Public Debt (% of GDP) 3) 24.7% 17.7% 14.8% 12.3% 19.9% 34.7% 38.9% 39.4%
External Public Debt ($bn) 3) 12.1 11.7 12.7 13.8 18.6 26.6 33.4 42.9
Debt to IMF ($bn) 3) 1.6 1.2 0.9 0.4 4.7 12.9 16.2 22.2
Monetary & Banking Indicators
Monetary Base (% y-o-y) 34.1% 53.9% 17.5% 46.0% 31.6% 4.4% 15.0% 20.0%
Money Supply (M2, % y-o-y) 32.8% 53.9% 34.3% 50.8% 31.0% (5.4%) 20.4% 20.6%
Credit Rates (avg.; UAH; % p.a.) 17.9% 16.4% 15.1% 13.9% 17.5% 20.9% 16.4% 15.3%
Deposit Rates (avg.; UAH; % p.a.) 7.8% 8.5% 7.9% 8.2% 10.0% 13.8% 11.8% 9.3%
Total Credits (e-o-p; UAH bn) 88.6 143.4 245.2 426.9 733.9 719.0 731.9 819.7
Credits Growth (%; y-o-y) 30.6% 61.9% 71.0% 74.1% 71.9% (2.0%) 1.8% 12.0%
Total Credits (% of GDP) 25.7% 32.5% 45.1% 59.2% 77.3% 78.6% 66.3% 62.8%
Total Deposits (e-o-p; UAH bn) 83.0 132.7 184.4 280.2 357.8 328.0 395.0 475.0
Deposits Growth (%; y-o-y) 35.2% 60.0% 38.9% 51.9% 27.7% (8.3%) 20.4% 20.3%
Total Deposits (% of GDP) 24.0% 30.1% 33.9% 38.9% 37.7% 35.9% 35.8% 36.4%
Forex
Gross F/X Reserves ($bn) 9.5 19.4 22.3 32.5 31.5 26.5 36.0 46.0
Gross F/X Reserves (months of current year imports) 3.1 5.3 5.0 5.4 3.8 5.7 6.0 6.4
UAH:USD (market rate; e-o-p) 5.32 5.05 5.05 5.05 7.85 8.00 7.85 7.50
UAH:USD (market rate; avg.) 5.32 5.12 5.05 5.05 5.31 8.14 7.92 7.68
Notes: 1)Excluding social security funds, Naftogaz Ukrainy and bank rehabilitation costs; 2)The general government balance includes the central and local budgets and the
Pension Fund, but excludes bank recapitalization costs; 3)SDRs are treated as deficit financing item and included in debt statistics. Sources: SSC, Finance Ministry, NBU, Dragon
Capital estimates and forecasts
Tax Code: Neutral for Economy; Long-Term Positive for Stock Market 7

8. December 6, 2010
RESEARCH
36D Saksahanskoho, Director, Research
01 033 Kyiv, Ukraine Andriy Bespyatov, PhD, CFA
Tel.: (+380 44) 490 7120 bespyatov@dragon-capital.com
Fax: (+380 44) 490 7121
Economics Electricity, Oil & Gas
www.dragon-capital.ua
Olena Bilan Dennis Sakva
bilan@dragon-capital.com sakva@dragon-capital.com
Managing Director
Tomáš Fiala Politics Fixed Income
fiala@dragon-capital.com Viktor Luhovyk Olga Slyvynska
luhovyk@dragon-capital.com slyvynska@dragon-capital.com
SALES AND TRADING Olena Bilan
Banking & Insurance bilan@dragon-capital.com
EQUITIES Anastasia Tuyukova Igor Buinyi
tuyukova@dragon-capital.com buinyi@dragon-capital.com
Managing Director,
Equities Sales and Trading Metals & Mining Editing
Dmytro Tarabakin Sergiy Gayda Viktor Luhovyk
tarabakin@dragon-capital.com gayda@dragon-capital.com luhovyk@dragon-capital.com
Oleksandr Makarov
Managing Director, makarov@dragon-capital.com Research Assistants
International Equity Sales Volodymyr Skepskiy
Peter Bobrinsky Chemicals, Food & Agriculture, skepskiy@dragon-capital.com
bobrinsky@dragon-capital.com FMCG Nadiya Syhydyuk
Tamara Levchenko syhydyuk@dragon-capital.com
Director, Equity Sales levchenko@dragon-capital.com Vikentiy Chebotarov
Andriy Dmytrenko, CFA chebotarov@dragon-capital.com
dmytrenko@dragon-capital.com Manufacturing, Real Estate,
Telecommunications
Director, Trading and Domestic Sales Taisiya Shepetko
Denis Matsuyev shepetko@dragon-capital.com
matsuyev@dragon-capital.com
International Sales
Fyodor Bagnenko
bagnenko@dragon-capital.com
FIXED INCOME
Managing Director, Fixed Income
Dray Simpson
simpson@dragon-capital.com
Director, Fixed Income Trading
Ivo Suchy
suchy@dragon-capital.com
Fixed Income Trading
Oleksandr Ublinskykh
ublinskykh@dragon-capital.com
Fixed Income Sales
Kostyantyn Kucherenko
kucherenko@dragon-capital.com
Armen Bagirian
bagirian@dragon-capital.com
Svitlana Rusakova
rusakova@dragon-capital.com
DISCLAIMER
This report has been prepared by Dragon Capital for information purposes only and is not an offer or solicitation to deal in any security. The opinions, forecasts and
estimates in this report reflect our good-faith judgment as of the date of publication, and may change without notice. Although the information in this report comes
from sources we believe to be reliable, and although we have made every effort to ensure its accuracy at the time of publication, we make no warranty, express or
implied, of this report's usefulness in predicting the future performance, or in estimating the current or future value, of any security. Nor should this report be
regarded as a complete description of the securities or markets referred to herein. Any opinions expressed herein may differ from opinions on the same subject
expressed by other business departments of Dragon Capital as a result of employing different assumptions or methodology. Any investment decision made on the
basis of this report shall be made at the investor's sole discretion, and under no circumstances shall Dragon Capital or any of its employees or related parties be
liable in any way for any action, or failure to act, by any party, on the basis of this report. Nor shall Dragon Capital or any of its employees or related parties be liable
in any way for any loss or damages arising from such action or failure to act.
Dragon Capital does and seeks to do business with companies covered in its research reports. Investors should therefore be aware of a potential conflict of interest.
Additional information on securities or companies discussed in this report is available upon request. This report may not be reproduced without the prior written
permission of Dragon Capital; when quoting, please cite Dragon Capital.
Tax Code: Neutral for Economy; Long-Term Positive for Stock Market 8